Convertibles see strong bid; Ctrip.com improves dollar neutral; Alcoa mandatories active

By Rebecca Melvin

New York, July 9 – A strong bid in U.S. convertibles early Thursday – encouraged by the snapback in Chinese stocks and better U.S. stocks at the open – faded by midsession, leaving the market in the category of little changed on the day, a New York-based trader said.

A slide in China-related convertibles names came to an end, however, in response to a 5.8% climb in China’s Shanghai Composite index on Thursday.

“People are still trying to figure out what is going on in China,” a New York-based analyst said.

Ctrip.com International Ltd.’s convertibles, including the newer C and D bonds, were a little better on a dollar-neutral basis, a trader said, following sharp losses earlier in the week.

Ctrip shares were higher by about 3%.

Among other China issues, there was not a lot of demand. The convertibles of Qihoo 360 Technology Co. Ltd. saw a weak bid despite shares being up nearly 10%. Vipshop Holdings Ltd. and YY Inc. were also slack even though YY received an offer from management to go private for $68.50 per share, representing a 17.5% premium to the shares’ prior-day close.

Alcoa Inc.’s 5.375% mandatory convertible preferreds due 2017 were active and last seen up $1.03, or 2.7%, to $39.79 in the early going, but those gains were pared intraday. That compared to the aluminum producer’s common stock’s early level, which was up 30 cents, or 3%, to $10.80.

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